Correlation Between KONE Oyj and Revenio
Can any of the company-specific risk be diversified away by investing in both KONE Oyj and Revenio at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining KONE Oyj and Revenio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KONE Oyj and Revenio Group, you can compare the effects of market volatilities on KONE Oyj and Revenio and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in KONE Oyj with a short position of Revenio. Check out your portfolio center. Please also check ongoing floating volatility patterns of KONE Oyj and Revenio.
Diversification Opportunities for KONE Oyj and Revenio
Poor diversification
The 3 months correlation between KONE and Revenio is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding KONE Oyj and Revenio Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revenio Group and KONE Oyj is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on KONE Oyj are associated (or correlated) with Revenio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revenio Group has no effect on the direction of KONE Oyj i.e., KONE Oyj and Revenio go up and down completely randomly.
Pair Corralation between KONE Oyj and Revenio
Assuming the 90 days trading horizon KONE Oyj is expected to generate 3.0 times less return on investment than Revenio. But when comparing it to its historical volatility, KONE Oyj is 1.75 times less risky than Revenio. It trades about 0.18 of its potential returns per unit of risk. Revenio Group is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 2,710 in Revenio Group on November 3, 2024 and sell it today you would earn a total of 384.00 from holding Revenio Group or generate 14.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KONE Oyj vs. Revenio Group
Performance |
| Timeline |
| KONE Oyj |
| Revenio Group |
KONE Oyj and Revenio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KONE Oyj and Revenio
The main advantage of trading using opposite KONE Oyj and Revenio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KONE Oyj position performs unexpectedly, Revenio can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Revenio will offset losses from the drop in Revenio's long position.| KONE Oyj vs. Sampo Oyj A | KONE Oyj vs. Fortum Oyj | KONE Oyj vs. UPM Kymmene Oyj | KONE Oyj vs. Neste Oil Oyj |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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